The shares of income and wealth of India’s top 1% at 22.6% and 40.1% respectively is at their “highest historical levels” in 2022-23, beating even developed economies such as the US, according to a paper released by the World Inequality Lab.
The paper, co-authored by economists Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, and Anmol Somanchi, said the country reached its historical highs in the last financial year. Naming the paper, the “Billionaire Raj”, the authors claimed that the country was now more unequal than even the British Raj.
Post-independence era saw the income and wealth gap decline till the early 1980s after which “it began rising and has skyrocketed since the early 2000s”, the report said.
It also claimed that between 2014-15 and 2022-23, the rise of top-end inequality, when it comes to wealth concentrations, has been significantly high. One of the major issue on policy level has been the country’s taxation system. The paper said as per the suggestive evidence, “Indian income tax system might be regressive when viewed from the lens of net wealth.”
“A restructuring of the tax code to account for both income and wealth, and broad-based public investments in health, education and nutrition are needed to enable the average Indian, and not just the elites, to meaningfully benefit from the ongoing wave of globalization,” according to the paper.
It said a “super tax” of 2% on the net wealth of the 167 wealthiest families in 2022-23 would yield 0.5% of national income in revenues and create valuable fiscal space to facilitate such investments, besides serving as a tool to fight inequality.
Given the country’s population, the levels of inequality will have significant impacts on the global dynamics.
Highlighting the country’s average income levels, the paper said between 1960 and 2022, income levels grew at an average of 2.6% per year in real terms. While the between 1960 and 1990, the country a real growth rate of 1.6% year-on-year, average incomes grew by 3.6% a year between 1990 and 2022.
In terms of income, the top 10%’s pie declined from 40% at the time of independence to 30% by 1982. In 2022, it jumped to a whopping 60%, according to the paper. In contrast, the bottom 50% of the country held only 15% of the national wealth in 2022-23.
The paper also highlights the levels of disparity among different income groups. According to the paper, the top 1% holds an average of Rs 5.4 crore in wealth, 40 times the average Indian. However, “the bottom 50% and the middle 40% hold Rs 1.7 lakh (0.1 times national average) and Rs 9.6 lakh (0.7 times national average) respectively. At the very top of the distribution, the wealthiest ∼ 10,000 individuals out of 92 million Indian adults own an average of Rs 2,260 crore in wealth, 16,763 times the average Indian.”
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